President Biden released a $6.8 trillion budget proposal on Thursday that would reduce the deficit, raise taxes on the rich, bolster military spending and ramp up competition with China.
The plan is widely considered to be dead on arrival with Republicans, who control the House. But it serves as an opening bid as lawmakers in Congress grapple over raising the debt limit as well as a policy blueprint for Mr. Biden’s widely anticipated re-election campaign.
In a speech in Philadelphia on Thursday, Mr. Biden said that his budget was designed to “lift the burden on hard working Americans” and drew sharp contrasts with the proposals that Republicans have offered, which the president argued would threaten the nation’s social safety net programs and benefit the rich.
The budget pitches a return to a progressive tax policy.
During his first two years in office, many of Mr. Biden’s most progressive campaign proposals were discarded from the legislation that he signed. But in his 2024 budget, the president suggested he would campaign again on those policies.
The budget calls for a new 25 percent minimum tax on billionaires, an increase in the corporate tax rate to 28 percent from 21 percent and quadrupling a tax on stock buybacks to 4 percent from 1 percent. It would also eliminate the tax treatment of “carried interest” that allows private equity and hedge fund executives to pay lower tax rates than many of their salaried employees and would block billionaires from using retirement savings accounts as tax shelters.
In all, the budget would usher in around $5 trillion of tax increases over the next decade, with most of those increases aimed at the wealthiest Americans and large corporations.
Democrats want to reduce the deficit too.
As lawmakers fight over raising the debt limit, Republicans have insisted they will allow the government to borrow more money to pay its bills only if there is an accompanying plan to reduce the federal deficit. Their proposals tend to hinge on deep spending cuts, but Mr. Biden’s plan makes clear that he and the Democrats want to use tax increases, enforcement of the tax code and the closing of tax loopholes to reduce America’s reliance on borrowed money.
Beyond tax increases, Mr. Biden is also proposing new savings for the government stemming from more aggressive negotiation over prescription drug prices. The White House estimates that those changes and other tweaks to the drug negotiation provision would save the government an additional $200 billion over 10 years, which it seeks to direct to the Medicare trust fund.
The plan would reduce federal budget deficits by nearly $3 trillion over the next 10 years, according to White House estimates.
Biden leans into military spending, with a focus on countering Russia and China.
The White House’s plans for reducing the deficit have drawn scoffs from Republicans, but Mr. Biden’s budget does include some spending plans that they might find palatable.
The budget goes big on military spending, requesting $842 billion for the Defense Department, a 3.2 percent increase from 2023. The funds would be used to modernize America’s nuclear deterrent capabilities and would allocate more than $6 billion to support Ukraine. They would also allocate $753 million to counter “Russian malign influence” and related needs like cybersecurity.
Mr. Biden also takes a hard line when it comes to China, which is one of the few subjects that tends to garner bipartisan agreement in Washington.
The budget says explicitly that the Biden administration wants to invest in new says to “out-compete” China. It proposes $9.1 billion in investments next year through the Pentagon’s “Pacific Deterrence Initiative” which includes expenditures on new weapons systems that can be used to protect allies and defend U.S. interests in the region.
Republicans find little to love in the president’s plan.
Moments after Mr. Biden released his budget, Republicans were ready to pounce.
Senator Chuck Grassley of Iowa, the top Republican on the budget committee, said, “President Biden’s FY2024 budget proposal is a roadmap to fiscal ruin” and asserted that the president “doesn’t seem to give a rip about keeping his promises or securing the fiscal health of our nation.”
Speaker Kevin McCarthy was equally unimpressed, arguing that the budget was “completely unserious.” He made clear that Republicans would not support reducing the deficit through tax increases.
“Mr. President: Washington has a spending problem, NOT a revenue problem,” Mr. McCarthy said on Twitter.